contract law essay

vicarious and employers liabilities need to be considered

Colin v Connect Co.

Vicarious liability requires that tort is committed by a person who is classified as an employee and that it is committed in the course of employment. In order to establish whether the person is an employee, the courts rely on one of three different tests. The control test establishes that the employer has the power to control both the work the employee does and the manner in which work is executed. This test is rarely used nowadays, mainly because the nature of businesses does not always allow such control over employee’s work. The integration and organisation test was applied in Jordan and Harrison Ltd v Macdonald and Evans [1952] 1 TLR 101 where it was held that an employee is defined as a person whose work is seen as a contribution to the business as a whole. This test has been criticised as being unclear, however it does suggest that an employee would be a person that works for one employer, while independent contractor can work for many different businesses. Third, and arguably the most frequently used test is the pragmatic test. In Ready-Mixed Concrete (South-East) Ltd v Minister of Pensions and National Insurance [1968] 2 QB 497 the court found that certain conditions would need to be satisfied under the pragmatic test. A person will be classified as an employee is the work or service they provide is in consideration of a wage or other remuneration, the service provided is subject to a control by another person or employer himself, and the provisions of the employment contract are consistent of that person being classified an employee.

Establishing whether a person is an employee or an independent contractor is important as such distinction will have a different bearing on employers’ liabilities. The requirement for the worker to be an employee limits the liability to employees only and does not apply to independent contractors. In this case Excavate Co is defined as an independent contractor. Following the pragmatic test it could be established that although Connect Co is providing a payment for their services, this payment is a one-off payment, rather than a wage that is paid in regular intervals. Furthermore, Excavate Co were contracted by Connect Co specifically for their expertise in the excavation of the road and laying cables. This is not within the business parameters of Connect Co, and arguably they were not able to provide a specific guidance or control over the work carried out by Excavate Co. Thirdly, the machinery and tools used by Excavate Co was not provided by Connect Co, rather they brought their own tools, which establishes that they are independent contractors and not employees of Connect Co.

An employer could still be liable for a tort committed by an independent contractor. This was discussed in Rowe v Herman [1997] 1 WLR 1390 where it was held that such liability can occur where the work commissioned by an employer involves extra hazardous acts, or dangers in or on a highway. The work carried out by Excavate Co would not constitute a hazardous act, however it could be considered to be a danger in or on a highway as the excavation was done on the main road and it should have been reasonably foreseeable that cyclists with different types of bicycles would be using this road.

Connect Co would therefore not be liable for Colin’s injury and his damaged property, since their vicarious liability does not extend to independent contractors. Colin would need to bring a claim against Excavate Co for any injuries and damaged property.

Pauline v Connect Co.

Through the application of the pragmatic test, Molly can be defined as an employee. Details of her employment are not entirely clear, however she is employed in the role of their general driver, and as such she has the use of their vehicle. As previously established, vicarious liability requires the person to be an employee and to commit the tort in the course of employment. It is necessary to consider Molly’s act in order to establish whether it had occurred in the course of employment.

An act that has been authorised by an employer, or an unauthorised act that is closely connected to the authorised act, will make an employer vicariously liable for the employee’s tort. However, such act needs to be committed in the course of employment and not while the employee is “on a frolic of their own". The act needs to be within the scope of their employment, and not too far removed from their duties as employees. Both geographical and task departure are taken into consideration when considering whether the act falls within or outside the scope of employment. In Harvey v R.G. O’Dell [1958] 1 All ER 657 it was held that stopping to take a lunch break was a reasonably expected act by an employee. Taking this case law into consideration, Molly’s act did not fall outside her scope of employment. Although her journey was taken via a different and slightly longer route, she recognised that it would allow for her lunch break and not make her late for work.

Both Molly and Connect Co are liable for Pauline’s injuries, making them jointly liable. Molly is liable because as a driver she owed a duty of care to all road users. Connect Co, on the other hand, is vicariously liable for their employee’s tort. This means that Pauline is entitled to bring a claim for personal injury against either of them or even both of them.

Since Connect Co will be vicariously liable for Molly’s tort, they could be entitled to recover losses directly from Molly. In Lister v Romford Ice & Cold Storage Co. Ltd [1957] AC 555 it was held that an employer can claim an indemnity from the employee, and recover full loss from their employee. Although Connect Co are within their rights to claim indemnity, they might consider the impact this could have on the work relationship with Molly and any other employees.

Fashions Ltd v Connect Co.

In order to establish whether Connect Co is vicariously liable for the tort committed by an employee lent to them by the Sparks Co, it is necessary to consider the law concerning lending employees.

This issue was considered in Mersey Docks & Harbour Board v Coggins & Griffiths Ltd [1946] 2 All ER 345 where it was held that the permanent employer would need to show that vicarious liability should be with the special employer, i.e. the employer who requires the assistance of the lent employee. However, this might be difficult to show as the court will need to establish the employer who pays the wages, who has the power to dismiss the employee, the length of the loan period, and whether the tools are provided by the special employer or the general employer. Connect Co could argue that the employee that was lent to them was in fact a contractor that was sent by the Sparks Co, an electrical company in a business of sending their own employees to work on client’s sites. The employee’s wages are being paid by Sparks Co, and any fees that Connect Co pays to Sparks Co, are paid for the general services that the company provides, rather than a particular service provided by a particular employee. The period of loan is very short and temporary, which also shows that the employee is working in a capacity of a contractor and not in the capacity of Connect Co’s employee.

However, since Connect Co has provided their own employee to act as a supervisor and to ensure that the work is carried out correctly, the courts might find that both Connect Co and Sparks Co are equally responsible. In Viasystems Ltd v Thermal Transfer [2006] QB 510 it was held that where both the permanent and the specific employer are in a position to control the acts of the employee, they both might be vicariously liable for the employee’s negligence. In this case Sparks Co could be held vicariously liable for the tort committed by their employee as this occurred during the course of his employment. Furthermore, it is a requirement that all employers should provide competent and skilled employees. It could be argued that the employee’s negligence would have been reasonably foreseeable to another person with the same skills and experience. Connect Co, on the other hand, might be held liable as they have provided their own employee to supervise the work carried out. However, Connect Co could argue that the negligence would not have been foreseeable to the supervisor as he would not necessarily have the knowledge to understand how the machinery works.

Connect Co could therefore have a claim against Sparks Co, any damages from which might be deducted if they are seen to have been contributory negligence. Furthermore, Fashions Ltd would have a claim against Connect Co for any damages they accrued from Sparks Co.

Question 2

For a contract to be legally binding it needs to consist of an offer and acceptance, consideration and intention to create legal relations. Consideration can be defined as a promise or an act that provides a benefit to the person receiving it or a disadvantage to the person providing it.

(a) The issue in this case concerns the consideration element and whether Steve’s performance of the existing contractual duty, which is already owed to Sue under their contract, could amount to consideration for a promise of additional payment. In Stilk v Myrick [1809] 2 Camp 317 it was held that performance of an existing duty for a promise of additional payment is not an adequate consideration. This issue was further explored in Williams v Roffey Bros [1991] 1 QB 1 where it was held that in certain circumstances the performance of existing contractual duty could qualify as an adequate consideration. In that particular case the court found that if two parties entered into a contract, and one party recognised that the work might not get done in time by the other party, and if the first party promised an additional payment in return for a promise that the work will get completed in time, then this promise of additional payment and the promise of completion of work would amount to adequate considerations. The courts further recognised that the promise of payment could be made under the economic duress, and they emphasised that any promise made under duress would not qualify as a good consideration.

In order to recover the additional sum of £3,000, Steve must have given consideration for Sue’s promise to pay that additional amount. Following on from the decision in Stilk v Myrick it could be argued that Steve had not provided any additional service or a promise of an additional service that could amount to consideration. He had done exactly what he had previously agreed to do in the original contract.

However, the courts could also follow the decision in Williams v Roffey. According to that decision, the courts are very careful to establish that no economic duress had been exerted on to Sue by Steve. However, it could be argued that Sue was at risk of losing a large booking and potentially losing more business had the work been delayed. Although Steve might not have necessarily exerted any pressure as such, he was aware that she needed the work to be completed on time in order to accommodate any potential customers. It could be argued that since Steve did not expressly ask for an additional payment in order to complete the work in time, Sue would be required to pay the additional £3,000 unless she could show that she was under duress. However, if the courts followed the decision in Stilk v Myrick, she would not be required to pay the additional amount as Steve’s consideration would not be considered a valid one as he was simply completing an existing contractual duty.

(b) In order to establish Sue’s legal position, it is necessary to consider the exact manner in which the contract between her and Steve had been discharged. A legally binding contract can usually be discharged on performance of the contract, by frustration, agreement or by one party breaching the contract.

By failing to complete the work, Steve has not fulfilled the condition of the contract that the work will be done during the period of 6 weeks, and has therefore breached the contract. Sue will not be required to fulfil her obligations and does not therefore need to pay the remaining £10,000. If the instalments of payment are divided to represent certain stages of work as being complete, then Sue will not be entitled to recover £15,000 which she had already paid. In practice Sue might not be entitled to recover any money already paid to Steve as the majority of work seems to have already been completed. Sue had to contract another builder to complete the work and she paid him £14,000. She therefore may be entitled to claim the excess fee of £4,000 from Steve. The final payment was going to cost her £10,000; therefore it could be argued that this is the amount she had expected to pay. The additional £4,000 should therefore be recovered in order to put Sue in a position she would have been if the contract had not been breached by Steve.

(c) Legally binding contracts tend to ensure that all obligations listed under the contract are fulfilled. However, in situations when this becomes impossible due to one party’s breach of contract, the court will consider the extent of the obligations each party has fulfilled and whether any money can be recovered by the innocent party. In the present case Sue has wrongfully prevented Steve from completing the work and fulfilling his contractual obligation by asking him to stop the work he was doing. Steve will be entitled to claim damages for Sue’s breach of contract. The court’s intention when considering the extent of damages would be to put Steve in a position he would have been if the contract had been performed to completion. His damages would be based on the price set out in the contract. Seeing as Sue had already paid him the amount of £5,000, his damages would constitute the remaining payment of contractual value of work, i.e. additional £20,000. Since this breach of contract was done by Sue, she would not be entitled to recover any costs from Steve and would herself be required to compensate Steve for loss of earnings.

Total word count: 2468

Request Removal

If you are the original writer of this essay and no longer wish to have the essay published on the LawTeacher website then please click on the link below to request removal: